Florida Power & Light Company today submitted a plan to the Florida Public Service Commission that would limit an increase in prices spurred by unprecedented fuel costs to 8.7 percent for a residential customer. A special refund to customers next June from a revenue sharing provision of FPL's three-year, $1 billion rate reduction agreement will partially offset the fuel cost increase.
A 1,000 kilowatt-hour residential bill for comparison would rise from $74.12 today to $80.55 during 2001.
"Our plan includes spreading $518 million in unrecovered fuel expenses over a two-year period, rather than the typical one-year timeframe. This way, we are able to ease some of the impact of these extraordinary increases in fuel costs on our customers," said Paul Evanson, FPL president. "Certainly no one could have predicted how high oil and natural gas prices would climb -- or how long they would remain at these levels. But we can in part credit efficient operation of our power plants and diversity in our fossil and nuclear generation with helping to protect our customers from even higher electricity prices."
The cost of oil has more than doubled since the first quarter of 1999 and has not been this high since the Gulf War in 1990. A barrel of oil (42 gallons) for electric generation in January 1999 cost FPL $10.61, compared with FPL's price at the end of August of $28.40 -- a 168-percent increase in 19 months. Market prices are even higher, most recently topping $32.25 per barrel.
The price FPL has paid for natural gas also has risen unabated, climbing 70 percent since January 1999 ($2.67 to $4.55 per million Btu at the end of August). Market prices for natural gas have reached $5.26 and with the onset of winter may climb further as demand for heating fuel in other areas of the country increases.
Each year, typically in September or October, Florida utilities adjust the fuel, environmental, purchased power and conservation components of the customer bill to true-up actual expenses for the past year and project expenses for the coming year. The adjustments, once reviewed and approved by the PSC, will appear on customer bills during the following calendar year -- in this case January through December 2001.
As a further effort to lessen the impact of clause adjustments on customer bills, FPL has asked the PSC to spread the cost of a $222.5 million buyout of purchased power contracts with two Palm Beach county power plants over five years and delay the start of recovery from customers until 2002. Because those contracts were mandated by state and federal governments to meet customer demand for electricity, that cost typically would be included in both capacity and fuel clause calculations.
"On a positive note, our customers can expect to receive a refund on their bills this coming June resulting from a revenue sharing provision in our April 1999 three-year, $1 billion rate reduction agreement reached with the PSC and the Office of Public Counsel," Mr. Evanson said. That refund -- expected to be between $75 and 100 million -- will amount to a one-time credit of approximately $12 on a 1,000 kilowatt-hour bill. Because of their much higher electricity use, commercial and industrial customers will receive approximately $13,000 and $70,000, respectively. Last June, FPL returned approximately $28 million to its customers.
Florida Power & Light Company is the principal subsidiary of FPL Group, Inc. , one of the nation's largest providers of electricity-related services with annual revenues of more than $6 billion. FPL serves 3.8 million customer accounts in Florida. FPL Energy, LLC, FPL Group's U.S. and international energy-generating subsidiary, is a leader in producing electricity from clean and renewable fuels. Additional information is available on the Internet at www.fpl.com and www.fplgroup.com.
Other FPL Group, Inc. press releases are available at no charge through
PR Newswire's Company News On-Call fax service and on PRN's Web site. For a
menu of FPL Group, Inc. press releases or to retrieve a specific release, call
800-758-5804, ext. 319763, or http://www.prnewswire.com/comp/319763.html
SOURCE: Florida Power & Light Company